Private brand products are evolving in positive ways. Two-thirds of consumers
recently surveyed by market researcher IRI said they plan to purchase private brands more frequently in the near future. ”The market is quickly transforming, as assortments evolve and become more targeted,” states Mark McKeown, principal of retailer gateways-client insights
Retailers are also expanding their overall private brand labels. IRI tracks store shelf space in terms of overall product assortments and found there are increases in private brands across categories, ranging from 2 to 19 percent, McKeown says. “This is likely due to retailers using private brands to drive loyalty to their banners, which can increase shopping trips, basket size and same-store sales,” he adds.
Yet, retailers can often fall in a trap, not paying adequate attention to mature categories of private brands. Even if a product has not fundamentally changed much, there are opportunities to refresh its packaging, product information, serving size and promotions, says Jim Wisner, president of Wisner Marketing Group, a Libertyville, Ill.-based consulting firm specializing in private brands.
“[Products] can be made better-for-you or have clean labels,” he adds.
Store brand product development is growing at a greater rate than current market shares would suggest, Wisner adds. “Mature categories can certainly be made more exciting, particularly because consumers have an extremely high regard for the quality of certain private brand categories,” he says.
There are many ways to differentiate what historically were thought of as commodity items. Shelf optimization is invaluable, notes Stephen Goldsmith, managing director of Hanover Research in Arlington,
Va. “It allows store brands to draw attention away from name brands or to specific store areas,” he says. “Dynamic technology, such as cart or basket trackers or GPS locators, allows brands to understand how a customer interacts with the product, aisle or entire store, and leads customers to store brands.”
Eggs, which are praised for their high protein content, vitamins and nutrients, comprise one of the oldest grocery product categories and are becoming trendier in diets in part because of their recent blessing by the U.S. Dietary Guidelines as being healthier. An egg’s cholesterol content (187 milligrams per single large egg) used to be deemed high, the main reason consumers avoided them. But the updated guidelines removed the daily limit on cholesterol intake, which has egg producers and protein-loving consumers cheering.
Market research firm Packaged Facts says eggs align well with today’s dietary protein needs (an egg contains 6 grams). The new nutritional consensus may be helping fresh grocery eggs hold a steady 93 to 94 percent usage rate in U.S. households, the firm says, noting that usage of organic eggs surged to 26 percent in 2017.
“Private label fresh eggs are seeing higher dollar sales (31.1 percent for the last 52 weeks ending July 31 versus a year ago),” McKeown adds. “This may be due to organic eggs, where dollar sales, unit sales and velocity are up.”
Attributes such as cage-free, antibiotic-free, vegetarian-fed and omega-3-fortified can allow retailers to participate in the premium and higher margin segment of the category, says Randy Burt, a partner at A.T. Kearney, a Chicago-based management consultant firm.
“The first step is to use in-store marketing and promotions for these products, as well as digital and conventional shopper communications to drive trial and repeat,” he says. Sampling and store demonstrations can also be effective at driving trial, Burt adds.
Consumers will pay a premium for quality, so retailers should focus on private brand growth and market expansion, Goldsmith adds. “Store brands can use this to reinvigorate mature categories with cage-free organic eggs, environmental and ethical messaging and artisan-style packaging,” he notes.
Specialty eggs, such as organic versions, draw a substantial share of health-conscious food shoppers. But store brand eggs haven’t been touting their health benefits, notes David Sprinkle, Packaged Facts’ research director.
“Non-store brand eggs appeal disproportionately to health-conscious shoppers because they are disproportionately likely to have better-for-you positioning, such as organic,” he says. “I don’t think store brand organic eggs would be less appealing to the health-conscious shopper than non-store brand eggs — in fact, I’d suspect the opposite, giving the price advantage,” Sprinkle says. “The point is the premium characteristics of the eggs themselves, not the labeling.”
One revamped store brand of eggs is at Gelson’s Markets in Encino, Calif., where the independent grocer recently converted to 100 percent cage-free, private brand eggs and expects to be 100 percent cage-free on all of its available eggs by 2020. Local California farms supply the cage-free eggs, which Gelson’s promotes via newsletter ads, social media posts and store signage.
“It is important whenever it makes sense to our customers,” says Rich Gillmore, Gelson’s director of center store category management. “We are dedicated to providing what customers want, and current trends are pushing us in that direction. Customers have been trending to cage-free eggs for some time. It is all about education and communication. We have received a positive response [to the conversion].”
RIDING THE JAVA WAVE
Even though the coffee category has been around for decades, coffee is thriving. Market researcher Statista says coffee sales are perking at nearly $13 billion and will continue to do so.
Coffee is also evolving with new roasts and flavors in microbrews, cold brews, nitro brews and fair trade versions as well as iced, spiced, pods (capsules), cascara and others. As consumers continue to search for higher quality and more coffee choices, private brands are stepping up to meet their needs.
Walker, Mich.-based Meijer, for example, offers several distinct flavors in its Meijer Gold line of ground and whole bean coffees that the company says are the equal to those in gourmet groceries. Flavors include Michigan Cherry and Mackinac Island Fudge, which pay homage to the company’s Michigan roots.
“Some private brands have created a loyal shopper base in certain flavors and roasts,” McKeown adds.
One of the hottest trends in the coffee space is cold-brew coffee, which has been launched by numerous national and private brands. Sales of cold-brew coffee rose 370 percent in two years, according to reports. Linked with sugar reduction, cold brews offer an energizing but lower-calorie alternative to sweet ice tea.
Cold brews can also be consumed throughout the day, not just at breakfast. TreeHouse Foods in Oak Brook, Ill., offers a six-flavor line called Steep 18, sourced from quality Arabica beans and steeped for 18 hours to ensure potency and taste, the company says. Steep 18’s aseptically packaged carton helps keeps it fresh for up to a year with no preservatives.
In June, Irving, Texas-based 7-Eleven introduced its own version of cold-brewed coffee. The convenience retailer says the new beverage is not just for the morning, but for later in the day and on weekends.
Arlington, Va.-based Lidl offers cold-brew coffee concentrate in original, roasted coconut and French vanilla flavors while Cincinnati-based The Kroger Co. offers Kroger iced coffees in half-gallon easy-pour cartons. Flavors include vanilla, caramel and mocha light.
With their fast-paced lifestyles, millennials want private coffee brands that pass muster on taste and budget. Thus, retailers are testing different ways for their own brands to stay relevant with millennials and stand out from the crowd.
“Flavors can be developed by better understanding what customer needs are not being met, and fan favorites require a significant understanding of the customer base and brand expectations,” Goldsmith says. “To ensure success, brand owners should conduct extensive sensory tests on new flavors and niche products.”
PAPER TOWELS CLEAN UP
Private brand paper towels hold the top spot of market share at 30 percent in the overall $5.1-billion paper towel category, according to IRI’s latest data for the 52-week period ending May 20. Sales of private brands climbed 3 percent, IRI adds.
One private brand that impressed Consumer Reports in its latest review of the best paper towels is Bentonville, Ark.-based Walmart’s Great Value Strong & Absorbent brand. “When it comes to slurping up spills, some paper towels really deliver, some don’t,” Consumer Reports notes. “Some store brands offered impressive absorbency, scrubbing and strength at a good price.”
First Quality Enterprises, a Great Neck, N.Y.-based manufacturer of private brand paper products, says it is critical to use high-quality raw materials from sustainable resources in the production of store brand paper towels.
Sustainability and environmental packaging claims attract customers,” Burt agrees.
GreenWise two-ply paper towels from Lakeland, Fla.-based Publix Super Markets are made using “100 percent-recycled fiber with 50 percent post-consumer fiber (may contain less than 0.5 percent incidental, non-recycled fiber), according to the company’s website. The packaging features understated but attractive multicolor label graphics.
Graphics can set a brand apart, as does variety, choose-a-size control, quality, strengths (number of plies) and performance criteria such as “scrubbing ability,” Burt says. “Paper towel innovation also centers on package size, particularly with home delivery, and click-and-collect shoppers who tend to over index on bulk items,” he explains.
Sprinkle advises marketing mature products as attractively as possible. Mature categories are also looking for more authenticity and premium qualities.
“Authenticity is particularly important to millennial shoppers, and adds an experiential component that enhances value,” Wisner adds.
Sources agree that digital communication/ordering and advertising are vital to attracting shoppers to both mature product categories and private brands.
Successful store leaders have curated their own products and need to tell how they did it and why the products have great value, McKeown points out.
The bottom line is to stay relevant and keep pace with changing consumer needs in mature categories, the sources say. SB
Hartman, managing editor of Store Brands, can be reached at [email protected]